Hank Luhring, IssueTrak Founder: Turning Down a VC Term Sheet to Keep a Lifestyle Business

1Mby1M Research · 1Mby1M Case Study

Interviewer: Sramana Mitra

This interview is part of the case study-based research and entrepreneurship education work of 1Mby1M, the global virtual accelerator founded by Sramana Mitra.

Abstract

Hank Luhring, IssueTrack Founder is a Norfolk, Virginia-born software developer with a psychology degree from Old Dominion University. He built a software services contracting business, Luhring & Associates, in 1992 after being laid off and choosing to work as a contractor rather than take a full-time job, growing the business slowly over eight years to five employees and $20,000 to 30,000 in monthly revenue by hiring people he already knew and trusted. As a solo founder, Luhring began entirely on his own – running solo for roughly six months before hiring his first programmer – and personally shaped the company’s direction, culture, and client relationships from the ground up.

Frustrated with the unpredictable, project-based nature of custom services work and inspired by observing an IT manager overwhelmed with unmanaged requests at a client site, Luhring began developing IssueTrak, a web-based IT service desk and issue-tracking application, in his team’s spare time starting in 1999, making its first sale in 2001 at $100/month under the then-emerging “Application Service Provider” model – an early precursor to SaaS. IssueTrak later added an on-premise licensing option ($895 per agent) after a major client required it, and the company grew organically entirely through inbound website inquiries without focusing on any particular market segment, deliberately declining venture capital funding to avoid the aggressive growth pressure and loss of control that would come with it.

The company settled into a stable, sustainable business generating roughly $5 million in revenue with about 30 employees, was named to the Inc 500 in 2007, and has since prioritized strong customer support and a positive internal culture over rapid growth, with Luhring eventually stepping down as CEO.

This case illustrates Solo Founder Success: a single founder, motivated by autonomy and meaningful customer relationships rather than venture-scale growth, independently built and steered a profitable, long-lasting business on his own terms. It reflects the 1Mby1M principle that bootstrapped, profitable businesses are a legitimate and personally fulfilling path even without pursuing rapid scale or an eventual exit.

Transcript of the Interview

Sramana Mitra: Let’s start at the very beginning of your journey. Where are you from? Where were you born, raised, and in what kind of background?

Hank Luhring: I was born in Norfolk, Virginia back in 1952. I was raised in a neighborhood where just about everybody had their own businesses. They weren’t fabulously wealthy, but they were all doing their own thing. This gave me the thought that someday I would have my own business as well.

Sramana Mitra: What path did you follow to that?

Hank Luhring: I went to college at the Old Dominion University and majored in Psychology. But I took a lot of computer science classes. I got the opportunity to work with a pretty prominent fellow in the field of engineering psychology which was a predecessor of the human-computer interface field. From that, I got the grounding and the idea that you develop systems to fit people instead of having people adapt to systems.

After college, I moved to California and worked for some school districts as a programmer. After a couple of years, I suggested that I become a contractor and not an employee. They said sure. That was the first business I started in my late 20’s. Later, I bought a mini-computer and did data processing for school districts. I did that for about 10 years. In the meantime, my brother Rusty started his own software company as well. His was more financial modeling and I was more into database type work.

After I sold the business, I moved back east and worked for a company up in northern Virginia. Then I moved back to Hampton Roads. I went to work doing their IT work for PCs. This was back when PCs were not prevalent. Most people at this company did not have a PC on their desk. I was brought in to introduce PCs and networking to all these people. That went well.

A colleague moved on to Volvo Penta and wanted to hire me. Again, I arranged to be a contractor. That was in 1992. That was the beginning of the company that became IssueTrak. When I first started the company, I named it Luhring & Associates. My first hire was a programmer I had worked with. That has become a pattern – hiring people I know.

Sramana Mitra: Always. You were doing the same kind of contract work and you were just hiring more people to help you expand the contract software services business?

Hank Luhring: Yes. We would do various projects for companies where they had looked for an application to do a job for them and couldn’t find them and they can’t program. Then they would hire us to write something from scratch. We did this time and time again. We would bill out by the hour. We were basically a services business. That was tough. It was not easy getting the work in because you didn’t have a product you could demonstrate. You had to convince them to work real hard to finish a project. Then it’s done. Now, what do you do? I wasn’t crazy about the ups and downs.

Sramana Mitra: When you started doing this alone, how long did that solo journey last before you started hiring programmers?

Hank Luhring: Six months. My first client was Volvo Penta. The colleague of a former colleague called and said, “Do you know anybody who can develop some applications?” It happened to be a homebuilder’s association. They needed a new membership database. They had ideas for what they wanted the package to do.

Sramana Mitra: They needed a programmer.

Hank Luhring: Right. They didn’t want to hire a programmer and have that person on staff all the time. They wanted a project developed. I went over there. That’s another thing I liked about that business. The people who wanted a custom solution often had a vision for how they would do things differently.

I ended up working for some really sharp people who had it down about what they wanted to do. In fact, one of my clients was this company from Charlotte, North Carolina that had gotten into helping drug companies distribute drugs to patients who couldn’t afford them through normal channels. It was called ‘Patient Assistant Program’.

Sramana Mitra: You were basically doing all kinds of applications from different domains. There was no logic to it. You were basically acting as a programmer for hire.

Hank Luhring: Yes. We needed more work.

Sramana Mitra: Six months you were solo and then you started hiring other programmers you knew. How many were you hiring and at what clip?

Hank Luhring: Very slow. I hired one person after six months. Then one of the women that I worked with at Volvo went on maternity leave and didn’t want to come back full-time. She joined me part-time to do some admin work and marketing. Then another fellow I knew at Volvo was let go in downsizing. That was not a smart move on Volvo’s part. This guy was amazing.

He went to work selling window replacements door-to-door. He hated it. I remember approaching him, “Steve, instead of selling windows, how about we sell software? You can help me sell our custom software solutions.” He joined me. He was good. He was one of those guys who’d wake up at 4 AM and work out.

Sramana Mitra: How many people were you at the end of the first year and how many people were you at the end of the second year?

Hank Luhring: After eight years, we were up to five people.

Sramana Mitra: You were doing all kinds of applications but all on Windows.

Hank Luhring: Yes. From 1999 to 2000, I saw that the web had come about. Not only that, there was the beginnings of a web application where a website could access a database on the backend. That really intrigued me. I was tired of the DLL hell that occurred on Windows. Also, I was tired of the services business. I felt like we were doing good quality software development, but it was our customers who owned the work.

Sramana Mitra: How much revenue were you making with these five people?

Hank Luhring: It might have been in the $20,000 to $30,000 a month. Eight years, five people. I decided I wanted to have a product company. I have done some tracking applications for clients. The healthcare company in Charlotte was a tracking application.

For Volvo Penta, I did a tracking application for their warranty department. I was sitting at a client’s office doing some programming. I noticed the head of IT walking around and getting bombarded with questions. I thought that this guy is not going to get anything done because he kept getting interrupted. What if there was a system where the users could put in their request and then they can be centralized and prioritized?

Sramana Mitra: IT service desk concept.

Hank Luhring: Right. I decided to write a web-based tracking application. It was at the end of 1999. We started developing in 2000 in our spare time because we still had existing programming projects. In 2001, we went to a tradeshow and made our first sale.

Sramana Mitra: How much were you pricing?

Hank Luhring: It was $100 a month. This was before the cloud. There was a term back then called Application Service Provider.

Sramana Mitra: I remember that. It was the precursor to the cloud.

Hank Luhring: We first offered IssueTrak on ASP or cloud basis. Then we had a client, EDS, who was working with Dal Chemical putting in new infrastructure all over the world. They want a cloud-based system. They wanted it fast and it also had to run in Dal’s data centers. We scrambled fast to make these software work on-premise as well as cloud. Then to this day, it’s the same codebase. It works either on-premise or on the cloud.

Sramana Mitra: What did you price the on-premise at?

Hank Luhring: It was $895 an agent. End users were free. End users could submit requests or issues. They could add notes and some limited reporting. If you wanted to have a request assigned to you, then you need to be an agent.

Sramana Mitra: What was an average deal size?

Hank Luhring: It varied a lot. The Dal deal could have been in the $10,000 range. To this day, we get one-agent deals and hundred-agent deals.

Sramana Mitra: You haven’t really focused on enterprise or mid-market?

Hank Luhring: Yes. It’s all been people finding us on the website. We have had a problem with the fact that we could do several things well, but then people get confused. Is it a helpdesk product or is it an issue tracking product? Is it customer support?

Sramana Mitra: It’s also a very competitive market at this point. There’s a company in our portfolio that was incubated in 2011 to 2013 that just went public at a $10 billion-plus valuation. That is Freshworks. They have that capability. ServiceNow has that capability. A lot of players have that capability now. In 2000, the market was a lot less mature.

Hank Luhring: One of the things we did intentionally was not to take outside money.

Sramana Mitra: Why was that?

Hank Luhring: The control. I came close. I talked to venture capitalists from time to time. I remember one VC giving us a term sheet. He said, “It’s going to be like you’re getting on a treadmill with no stop button.”

Sramana Mitra: From the point at which you involve a VC, you have to deliver $100 million a year in revenue for the next five to seven years. Zero to $100 million in revenue trajectory in five to seven is the VC’s desire. If you sign up for that, you have to commit to being on the treadmill constantly. It’s basically all-consuming.

It sounds to me that you wanted more of a lifestyle business where you didn’t want that pressure. It’s one of the things that I tell entrepreneurs. Success is a personal definition. You started as a solo entrepreneur. You bootstrapped solely with services, built a product company, and grew that at your own pace.

What is the revenue level now?

Hank Luhring: It’s in the $5 million range.

Sramana Mitra: How many people do you have?

Hank Luhring: 30 or so. What was very important to us from the beginning is we really get a lot out of interacting with customers. We have been told often by our customers that we provide the best support of any software company that these people deal with. I’ve hired people who really like pleasing the customer. That’s part of our culture. I have a good life. The people enjoy working with customers. I’ve stepped down as CEO. Dan Flowers is now the CEO. He’s doing some great things. We were named in the Inc 500 list in 2007 but we haven’t grown that much since then.

Sramana Mitra: This is a very interesting point that I want to close this conversation on, which is one of the reasons I like this case study. A solo entrepreneur whose primary motivation is autonomy and working with customers – these two factors can create very wonderful lives. It is not for everybody to chase unicorns and being on the treadmill. That’s a very intense path.

Some entrepreneurs do not like that path. In your framework, you desired autonomy and doing meaningful work. You have been very successful. You have built a successful life based on those parameters.

It was a pleasure talking to you.

Key Takeaways

• Solo Founder Success: Hank Luhring started Luhring & Associates in 1992 as a solo contractor after being laid off, choosing independence over a full-time job. He operated alone for roughly six months before bringing on his first programmer, and from the outset personally defined the company’s vision, hiring philosophy, and customer-first culture.
• Luhring bootstrapped the services business over eight years to five employees and roughly $20,000 to 30,000 in monthly revenue, hiring exclusively from his existing professional network – people he already knew and trusted – rather than scaling rapidly or raising capital.
• Frustrated by the unpredictable, project-based nature of custom services work, Luhring transitioned the solo-founded business toward a product company, developing IssueTrak, a web-based IT issue-tracking application, in his team’s spare time starting in 1999 and making its first sale in 2001 at $100/month under the early “Application Service Provider” model that preceded modern SaaS.
• IssueTrak later added on-premise licensing ($895 per agent) after a major enterprise client (working with EDS/Dow Chemical) required it, while keeping the same codebase across both cloud and on-premise deployments. The company grew entirely through inbound website inquiries without a defined enterprise or mid-market focus.
• Luhring deliberately declined venture capital funding, turning down at least one term sheet, to avoid the aggressive growth expectations – a VC’s “treadmill with no stop button” – that would come with outside investment. Instead, he built a stable, profitable business generating about $5 million in revenue with around 30 employees, prioritizing strong customer support and company culture over rapid scale.
• The case demonstrates that solo founder success need not mean chasing unicorns or venture-scale growth. Motivated by autonomy and meaningful work with customers, Luhring built a financially sustainable and personally fulfilling business on his own terms, eventually stepping down as CEO while the company continued on the values he established – reflecting the 1Mby1M principle that success is a personal definition.